The operator welcomes everyone to the Axon executive team's quarterly update. They discuss the release of their shareholder letter and remind listeners of the risks and uncertainties involved in forward-looking statements. The team then introduces a video highlighting their business, followed by CEO Rick Smith discussing their first-quarter earnings and his excitement for their developments in drones, robotics, and aerospace security.

The use of drones as first responders (DFR) is a promising opportunity for faster response times and improved decision-making in critical situations. However, current limitations, such as the need for a human observer and operating in daytime conditions, have hindered widespread use. The planned acquisition of Dedrone by Axon aims to solve these limitations and expand the use of DFR, with potential applications in various fields and the use of artificial intelligence.

The speaker believes that AI will mark the beginning of a new era and has the potential to unlock human resources for greater accomplishments. They introduce their latest innovation, Draft One, which uses AI to produce police reports and save officers valuable time. They are also focusing on other areas such as real-time operation solutions, expanding their ecosystem, and improving training with VR. The speaker believes that they are still in the early stages of their journey towards their goal.

The speaker acknowledges the importance of their company's mission in light of recent tragedies between the police and the public. They express their dedication to innovating for a better future and introduce Josh, who shares about their strong first-quarter results and momentum in pipeline development and customer-facing hiring initiatives. They credit their R&D teams for driving record demand for their products.

The paragraph highlights the company's excitement for the future and its potential for growth through the introduction of new products and expansion into international markets. The company also welcomes a new Chief Revenue Officer with experience in driving international cloud adoption. The team at Axon is grateful for the growth and success they have experienced in recent years and are focused on continuing to deliver on their financial commitments and mission.

The company is proud of their strong results in revenue and adjusted EBITDA, with 34% growth in both categories. This growth was driven by cloud and services revenue, as well as demand for TASER 10. They also saw growth in other categories and across all end-markets. Their ARR is now at $825 million, up 50% year-over-year. The company maintains a net revenue retention of 122%. They introduced adjusted gross margin to account for increased stock-based compensation.

The company has committed to keeping stock-based compensation at or below 3% for 2025 and beyond. Gross margin and adjusted EBITDA margin have improved, with the latter being the strongest in three years. The company plans to acquire Dedrone, which is expected to increase the company's TAM by $14 billion. The acquisition will have a slight impact on the company's adjusted EBITDA margin, but it will be incorporated into the software and sensors segment once closed.

Axon's acquisition of Dedrone is part of their M&A strategy to acquire talent and technology that complements their roadmap and expands their addressable market. This, along with their previous acquisitions of Sky-Hero and Fusus, has increased their TAM by 50% to $77 billion. The acquisitions have also improved their capabilities in robotic security and real-time operations, which are crucial for their future markets. Axon has increased their full-year revenue guidance to $1.94 billion to $1.99 billion, representing 26% annual growth. They expect adjusted EBITDA of $430 million to $445 million and plan to invest $80 million to $95 million in CapEx to meet the demand for TASER 10. Overall, Axon is pleased with their Q1 results and believes it demonstrates their strong execution and investments for the future.

During a Q&A session, Meta Marshall of Morgan Stanley asked about the approval process for Draft One and the contribution of Fusus to the company's overall performance. Erik Lapinski deferred to Rick Smith, who expressed enthusiasm for Draft One and mentioned the positive feedback from police officers and other agencies. He also noted that the adoption process is relatively easy and does not require much integration. However, it is still too early to make any specific predictions about the impact of Draft One on the company.

The company's new product is easy for officers to use and has received positive feedback. They expect it to contribute to revenue and help put more officers on the street. The recent acquisitions of Fusus and Dedrone have not had a significant impact on the company's overall growth rate, but there may be some impact on EBITDA due to integration costs. The company is being cautious in their EBITDA guidance for the year.

During a recent earnings call, an analyst asked about the strong revenue growth in the first quarter and the potential for deceleration in the rest of the year. The company's CFO and CEO responded by stating that they are optimistic about the rest of the year and that they will update their revenue guidance quarterly. They also mentioned that the first quarter typically has the easiest year-over-year comparison. The analyst also asked about the automation process for TASER and the impact on gross margins. The company's CFO and CEO provided updates on the automation process and stated that it may help improve gross margins over time.

Brittany Bagley, the CEO of a company, discusses their current focus on ramping up capacity and reducing costs. They have seen strong demand for their product, resulting in a 33% growth in Q1. However, they may take longer to implement cost-down initiatives due to the balance between capacity and demand. The company's gross margins for the rest of the year may be affected by a mix-shift between devices and software. The company expects their gross margin guidance to remain similar to Q1. In terms of seasonality, the company experienced a decline in bookings in the first quarter compared to the previous year's fourth quarter, which was a strong bookings quarter.

Josh Isner, CEO of a company, is asked about the seasonality of their bookings for the next year, this year, and the next several years. He explains that Q1 is typically a low-point for bookings due to various factors such as coming off a strong Q4, adding new salespeople, and lack of urgency from customers. However, he sees no red flags for the remainder of the year and expects a strong response from their sales team. He also mentions that federal bookings are often phased into multiple years.

The company recognizes revenue when products are deployed or shipped. The federal business has a healthy pipeline and is expected to have another successful year. The company is prepared to deploy products in response to a recent issue with a competitor's product catching fire, but is currently focused on building great products.

The company has invested a lot into their hardware and devices and has considered potential edge cases. They feel confident in how their products will perform. TASER 10 has been a strong performer, outpacing TASER 7 demand and showing promise in outperforming firearms. The company is working to ramp up production to get the device out to customers faster.

The speaker discusses the company's plans to invest in automation to increase their build capacity and mentions the potential for growth in their TAM due to recent acquisitions. They also address concerns about the use of one of their products, Dedrone, and explain its purpose in monitoring drones in the airspace.

The paragraph discusses the increasing threat of aerial attacks and the need for local governments and public safety to protect against them. Dedrone is a company that helps control aerial threats and also enables drones to be used as first responders. While there may be concerns about government drones, the use of drones for emergency response and transparent policies can gain public support. The company sees drones as a transformative technology that will be a significant part of their business in the future.

Rick Smith discusses the competitive landscape for their company's records management system and how it integrates with their other product lines. He explains that their investment in the system was strategic and has helped them stay ahead of potential competition. They also prioritize customer trust and have thoroughly evaluated the risks involved in using AI technology. Jeremy adds that they focus on their customers while also being aware of their competitors.

The speaker discusses the importance of the ecosystem in the development of AI, specifically in the context of body camera technology. They mention the large amount of data collected from body cameras and the growing use of AI techniques in a responsible and principled manner. They also mention the success and excitement surrounding their new product, Draft One. A question is posed about the potential issues with data sharing in the AI industry, but the speaker states that this has not been a problem for them so far.

The partners that share data through Fusus are primarily members of the community, businesses, churches, schools, and government agencies who want to be safer. There has not been any pushback against using the data responsibly to protect them better. Having aggregated access to large amounts of data is a powerful differentiator for Fusus, and they have built their products with this in mind. The fact that the data belongs to the customers incentivizes all parties to work together and play nicely in the sandbox. The customers have a powerful voice in how the tools they use, including Fusus, work together.

During a conference call, Trevor Walsh asked Rick Smith about the company's plans to focus on counter-UAS (unmanned aerial systems) use cases. Smith responded by saying they intend to lean into this area heavily, as their goal is to protect lives. They see this as an opportunity to not only serve existing customers, but also to attract new ones such as major sporting stadiums, critical infrastructure, and military organizations. The next question came from Joe Cardoso at JP Morgan, who inquired about the recent acquisition of Dedrone, a partner of Axon. Cardoso asked why now was the right time to acquire Dedrone and if there had been any changes in the company's thoughts around participating in the drone industry. Smith asked Jeff to answer this question.

The company decided to strengthen its balance sheet to prepare for M&A activity and to pick up important pieces of the puzzle for its roadmap and pillars. The recent acquisitions of Sky-Hero and Dedrone align with the company's vision for robotic security. The timing of the acquisitions was based on when it felt right for both companies. The company has a history of investing in Dedrone and saw an opportunity to acquire them. Regarding the ecosystem, the company has experience in balancing between building, buying, and partnering.

The company is constantly evaluating where they can partner with other providers and where they can self-build in order to achieve the most leverage. They have made strategic decisions with companies like Sky-Hero and Fusus, and will continue to carefully evaluate their options. The company has raised CapEx in order to accelerate their investment plans, despite a slower bookings quarter. They have confidence in their growing pipeline and are planning to add more automation and capacity gradually over time. It is unclear if there will be a significant inflection point in the future.

The speaker is addressing a comment made by Josh regarding the company's pipeline and future contracted revenue. They clarify that while Q1 may have had softer revenue, it does not reflect the overall trajectory of the year. The company is investing in more capacity to meet demand and avoid backlog in 2025. They are confident in their pipeline and are ramping up capacity steadily to prepare for 2025. The speaker also mentions that waiting 90 days to invest in capacity would only delay the process by 90 days, and they have enough confidence in the demand to justify the current investment. The call ends with the speaker thanking the participants and congratulating the company on their results.

The speaker is responding to a question about the growth of Axon and Cloud Services, stating that there was a $12 million increase quarter-on-quarter. They explain that this was due to a large increase in Q4 last year and that $13 million is a healthy step up each quarter. The speaker then addresses reported wins for Axon in the media, stating that they cannot comment specifically on RCMP field testing but that they are not aiming to be the low-cost vendor in the international market.

The speaker expresses confidence in the value and performance of their products, noting that other vendors in the same space may not always deliver as promised. They mention that customers may initially focus on cost, but eventually realize the value of their products and choose to invest in them, especially in international markets. The speaker believes that their strategy of prioritizing quality over cost will lead to long-term success. The call concludes with the speaker expressing pride in their team and looking forward to future updates.

This summary was generated with AI and may contain some inaccuracies.